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Volume is one of the best ways to tell where we are at in the market in terms of finding an actual final bear market bottom.



Bear market bottoms are formed after the capitulation phase which is a very high volume event. We have been seeing capitulation as margin calls, government takeovers and hedge fund failures have forced huge numbers of shares to be traded as the economic malaise has spread throughout the world.

During capitulation phases we see a tremendous number of new lows in the market, very few new highs and very few positive divergences in either technical or market breadth analysis.

We have formed a capitulation bottom. That is all this will be unless the bailout can get consumers spending beyond their means worldwide very rapidly.

What we need to form an ultimate bottom is a period of prolonged market apathy. The real major market bottom will form as volume falls off. At that bottom we will see a growing number of new highs, less new lows, additional positive divergences as the market makes a final bottom.

Keep in mind that the NASDAQ has not seen a new high since 2000. Neither has the SMH or SOX! We have been in bear markets there for over 8 years!